Benson Power suppliers still hoping for help

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While a bill in the Minnesota Legislature to provide financial compensation to fuel suppliers and haulers of Benson Power, LLC, has made it through committee hearings and now awaits approval on the Senate floor, a similar bill in the House is making little headway.

Sponsored by District 17 Sen. Andrew Lang, R-Olivia, the Senate bill sets aside $40 million for companies that have invested in supplying the Benson-based biomass power plant with turkey litter and wood chips.

However, after introduction by Rep. Tim Miller, District 17A-Prinsburg, March 21 the House version of the bill has failed to get a hearing. There was an informational meeting in the House Job Growth and Energy Affordability Policy and Finance Committee Monday, but no action was taken on the bill.

Benson Power is being purchased by Xcel Energy and is scheduled to be shut down this summer. It will eventually be leveled to four feet below ground. The site will then be prepared as a vacant lot for future development.

Since Benson Power started generating, first as Fibrominn, the companies have invested $120 million in equipment and facilities to meet its fuel needs, Craig Mataczynski, a consultant and former Xcel manager representing Benson suppliers, said in an information sheet handed out at the Legislature. “Nearly $50 million of those investments were made just in the past three years.”

Suppliers and haulers made their investments based on what they thought was a secure deal. Minnesota’s Legislature passed a biomass mandate in 1994 requiring Northern States Power, now Xcel Energy, to purchase 125 megawatts of biomass in exchange for storing spent nuclear fuel casks on a facility on Prairie Island.

Fibrominn, now Benson Power, was constructed outside Benson in 2005-2006 with the capacity to produce 55 megawatts of power burning turkey litter and wood chips, meeting nearly half of Xcel’s mandate to produce 125 megawatts of biomass electricity. Financing for the plant’s construction was partially secured based on a Power Purchase Agreement between the plant’s investors and Xcel Energy that obligated the company to buy Benson Power’s energy through 2028.

But during the 2017 Legislative session, Xcel sought legislations freeing it from the biomass mandate arguing that it could save its ratepayers $700 million by closing Benson Power and ending its contract at the Laurentian Energy Authority (LEA) biomass plant operated by the cities of Hibbing and Virginia.
Xcel further sought Minnesota Public Utilities Commission approval for buying Benson Power and closing it down.

In approving the legislation that ended the biomass mandate, the Legislature also approved a deal with would pay the City of Benson $20 million in compensation for the loss of the facility’s tax base and its 45 employees. At the time the plant was being proposed for the state in the early 2000s, the Department of Employment and Economic Security (DEED) had estimated it would mean an annual $8 to $10 million boost to the Benson area economy.  

Part of the deal with Xcel Energy also included it paying local real estate taxes for two years after the plant was gone as well as compensation for the city for investments it had made in serving the plant’s infrastructure needs....

 

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